A cell phone company has a fixed cost of $1,000,000 per month and a variable cost of $22 per month per subscriber. The company charges $33 per month to its cell phone customers. a.What is the annual breakeven point for this company? b. The company currently has 95,000 subscribers and proposes to raise its monthly fees to $39.95, what is the new annual break-even point if the variable cost increases to $25 per customer per month? c.lf 20,000 subscribers will drop their services because of mönthly increase in part (b), will the company still be profitable?
A cell phone company has a fixed cost of $1,000,000 per month and a variable cost of $22 per month per subscriber. The company charges $33 per month to its cell phone customers. a.What is the annual breakeven point for this company? b. The company currently has 95,000 subscribers and proposes to raise its monthly fees to $39.95, what is the new annual break-even point if the variable cost increases to $25 per customer per month? c.lf 20,000 subscribers will drop their services because of mönthly increase in part (b), will the company still be profitable?
Chapter6: Proudction Costs
Section: Chapter Questions
Problem 8SQP
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A cell phone company has a fixed cost of $1,000,000 per month and a variable cost of $22 per month per subscriber. The company charges $33 per month to its cell phone customers.
a.What is the annual breakeven point for this company?
b. The company currently has 95,000 subscribers and proposes to raise its monthly fees to $39.95, what is the new annual break-even point if the variable cost increases to $25 per customer per month?
c.lf 20,000 subscribers will drop their services because of mönthly increase in part (b), will the company still be profitable?
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